Delay chills court’s enthusiasm for freezing orders

Delay. It can be the bane of a liquidator’s existence depending on the circumstances and liquidator Steve Naidenov discovered just how baneful this week.

“Counting most strongly against the proposition that the orders sought by the plaintiffs are necessary or desirable to protect the plaintiffs’ interests is the time that has elapsed since the various events upon which the plaintiffs rely to justify the orders sought.” Justice Scott Goodman.

As liquidator of ACT-based project management outfit Peach & Co, the Aston Chace principal has been pursuing recoveries against former director Shane Anderson.

According to evidence put before Federal Court judge Scott Goodman Anderson’s tenure concluded on June 2019 after his replacement’s paid him $750,000 to go.

Naidenov was appointed in late 2021 following a referral from solicitor James Foster of Nelson McKinnon Lawyers.

By that time the company had ceased trading, there had been a further change of director and the ATO had given notice of its intention to audit the business.

As detailed in Naidenov (as liquidator) v Anderson, in the matter of Peach & Co Pty Ltd (in liq) [2024] FCA 1232 prior to his departure Anderson had directed the company to make several substantial payment to his mother.

As a result of its audit the ATO concluded that the company had incorrectly claimed GST refunds on his private expenses; on expenses incurred by other companies and on expenses that were not reconcilable to tax invoices as well as on expenses that were not paid.

Upon conducting investigations Naidenov also concluded that the former director was liable pursuant to breaches of Section 588G and issued demands for payment in July and September 2022.

Six months later, and with Naidenov’s demands unsatisfied, Anderson bought a block of land in Griffith and used it as collateral for loans from NAB and an individual lender by the name of Ashley Thomson, which the court heard were to fund construction of a dwelling.

But according to the court Naidenov didn’t find to about the purchase until he conducted public examinations of Anderson in the middle of 2023.

In late 2023 Anderson decided to flog Griffith. In April this year Naidenov filed a statement of claim, alleging that Anderson had contravened s 588G of the Act by failing to prevent Peach & Co incurring debts to the ATO at a time when the Company was insolvent.

By September 2024 the Griffith hadn’t sold and Anderson instructed his agents to put it up for auction.

This week Naidenov, supposedly galvanised into action by the imminent auction, filled an interlocutory process seeking to be appointed receiver of the property or freezing orders in the alternative.

The basis of his application was that such orders were necessary to preserve the company’s interests.

The court refused, reasoning that the delay undermined submissions that the Company’s interests would best preserved by such orders.

“Counting most strongly against the proposition that the orders sought by the plaintiffs are necessary or desirable to protect the plaintiffs’ interests is the time that has elapsed since the various events upon which the plaintiffs rely to justify the orders sought,” the judge said.

“Many of those events occurred a significant time ago. For example, the concerns relating to the ATO audit were published by the liquidator in his report to creditors dated 8 February 2022 and by July 2022 the liquidator had made demands asserting contraventions of s 588G of the Act; the events concerning the defendant’s examination by the liquidator occurred in mid-2023; and the District Court proceeding concerning the payments made to the defendant’s mother was commenced in December 2023.

“That these events did not spur the liquidator to seek freezing orders at the time(s) they occurred, and particularly as these events accumulated over time,rather suggests that such events did not (and do not) make orders of the kind now sought necessary or desirable for the purpose of protecting the plaintiffs’ interests.”